May 6 Earthbound Farm Organic, the largest grower of organic produce in the United States, is exploring a sale of the company, according to four sources familiar with the matter.
The San Juan Bautista, California-based company, whose investors include private equity firm Kainos Capital, has hired Barclays to sell the company in a deal that could be worth $600 million to $700 million, the sources said on Monday.
The sale process is in the early stages, the sources said. The company has roughly $75 million in annual earnings before interest, taxes, depreciation and amortization (EBITDA), the sources said.
In 2012, revenue topped $460 million, according to Moody's.
Fresh produce is typically regarded as a lower-margin business compared with processed foods because fresh goods are perishable and have high distribution costs.
However, recent deals in the organic foods sector have commanded high multiples. In July 2012, high-end juice maker Bolthouse Foods was acquired by Campbell Soup Co for $1.6 billion, about 11 times EBITDA.
That compares with a multiple of around 9 for recent transactions in the food and beverage sector, according to accounting and consulting firm Grant Thornton.
Earthbound Farm and Kainos Capital could not be reached for comment. Barclays declined to comment.
Dallas-based Kainos Capital is a new firm made up of executives from HM Capital's food and consumer products group. HM Capital, a private equity firm, said last year that it was winding down. HM Capital acquired about 70 percent of Earthbound Farm in July 2009.
Earthbound Farm grows and packages items including salads, vegetables and fruit. Founded in 1984 on a 2.5-acre backyard garden in Carmel Valley, California, it has since expanded to 26,000 acres.
The company was the first to sell pre-washed bagged salads, which are now available in 75 percent of all U.S. supermarkets, including retailers such as Costco Wholesale Corp, Walmart Stores Inc and Whole Foods Market Inc.